“Dow does not comment on rumor or speculation, as a matter of company policy”, a Dow spokeswoman on Tuesday night said.
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The chemical giants, which each have a market capitalization of about $60 billion, could announce a merger in coming days, people familiar with the matter said. The two companies have enough overlapping businesses that a lot of people will lose jobs.
According to their reports, the talks are in an advanced stage and a deal could be announced this week, but there is still no guarantee that a deal will be consummated.
DuPont, under Breen, who took over as CEO last month, had already been in talks with rivals, including Dow, about exploring options about its agriculture business. DuPont’s stable of goods includes Kevlar fibers and Corian countertops, while Dow’s encompasses Styrofoam insulations and sunscreen chemicals.
Based on sales, Performance Materials ranked second among DuPont’s six operating units in the nine-month period. The company’s prior CEO, Ellen Kullman, retired after fending off Nelson Peltz and Trian Fund Management LP, which sought board seats and criticized the company – and its leadership – for bloated corporate spending and a continued failure to hit earnings forecasts.
REUTERS A DuPont logo is pictured on the EMEA (Europe, Middle East and Africa) and Du Pont de Nemours International SA building in Grand-Saconnex, near Geneva.
Maybe we can start calling them the “chemical brothers”. But DuPont has a number of patents that keep many of its products proprietary. The company has been focusing more on specialty chemicals, which carry higher prices, whereas basic chemicals are more commoditized.
Yet victory for DuPont did not necessarily please shareholders.
Both companies have been under pressure from activist investors who have argued that the companies’ stocks were underperforming.
Pfizer’s $160 billion takeover of Allergan was this year’s biggest deal, followed by ABInBev’s $110 billion takeover of SABMiller.
On the agricultural side of their businesses, analysts have long spoken of the merits of a combination between Dow and DuPont. Pfizer is leaning toward splitting itself up into a faster-growing drug manufacturer and a slower-growing pharmaceuticals business, while Anheuser-Busch InBev has already agreed to sell off big swaths of its and SABMiller’s combined beer brands.
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A source pointed out that Liveris has sought a deal with DuPont for many years, and established lines of communication with Breen soon after he became CEO at DuPont in October.
